Social Sciences in China (Chinese Edition)

No.4, 2020

The Growing Path and Mechanism of Chinese Private Enterprises

(Abstract)

Zhu Bin and Lü Peng

In the past 40 years of reform and opening up, China’s economic development has made remarkable strides. Within this process, the growth of the private sector is especially impressive. In particular, entrepreneurs are important participants of the development of the private economy in China. This paper introduces the organizational process of start-ups into the study of elite mobility in emerging markets, exploring the relationship between the social origins of entrepreneurs and their entrepreneurial outcomes. Our research finds that the initial size and growth of a firm are essentially the result of resource convergence and integration, processes that depend on entrepreneurs’ characteristics. The initial enterprise scale, speed of growth and current scale of elite entrepreneurs are higher than those of grassroots entrepreneurs. With the deepening of economic reform and the growth of the private economy, the social origin of large business owners generally tends to be elitist, and the scale advantage of elite entrepreneurs, especially endogenous entrepreneurs, is more and more striking. The expansion of such enterprises’ superior position is mainly due to their more advantageous initial scale; after the start-up period, their growth speed advantage fails to increase synchronously. The government plays an important role in the development of private enterprise. In order to promote the further development of the private economy and release its innovation potential, it is necessary to give full play to the government’s function of supervising market operations and correcting market failure, and thus actively creating a good business environment.